Teledyne Technologies Reports Second Quarter Results

Income Taxes

The effective tax rate for the second quarter of 2023 was 21.0%, compared with 22.7%. The second quarter of 2023 reflected net discrete income tax benefits of $1.4 million compared with $1.0 million. Excluding the net discrete income tax items in both periods, the effective tax rates would have been 21.6% for the second quarter of 2023, compared with 23.1%.

Other

Corporate expense was $14.6 million for the second quarter of 2023 compared with $14.7 million. Non-service retirement benefit income was $2.9 million for both the second quarter of 2023 and 2022. Interest expense, net of interest income, was $22.3 million for the second quarter of 2023 compared with $22.5 million.

Outlook

Based on its current outlook, the company’s management believes that third quarter 2023 GAAP diluted earnings per share will be in the range of $3.76 to $3.90 and full year 2023 GAAP diluted earnings per share will be in the range of $15.60 to $15.88. The company's management further believes that third quarter 2023 non-GAAP diluted earnings per share will be in the range of $4.70 to $4.80 and full year 2023 non-GAAP diluted earnings per share will be in the range of $19.00 to $19.20. The non-GAAP outlook excludes acquired intangible asset amortization for all acquisitions, further FLIR integration costs and benefits or charges for acquisition-related tax matters. The company’s annual expected tax rate for 2023 is 22.3%, before discrete tax items.

Use of Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the United States (“GAAP”). We supplement the reporting of our financial results determined under GAAP with certain non-GAAP financial measures. The non-GAAP financial measures presented provides management, financial analysts, and investors with additional useful information in evaluating the performance of the company. The non-GAAP financial measures should be considered in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Further details on reasons that we use non-GAAP financial measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included following our GAAP financial statements.

Forward-Looking Statements Cautionary Notice

This earnings release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, with respect to management’s beliefs about the financial condition, results of operations, acquisitions and product synergies, integration costs, tax matters and businesses of Teledyne in the future. Forward-looking statements involve risks and uncertainties, are based on the current expectations of the management of Teledyne and are subject to uncertainty and changes in circumstances.

The forward-looking statements contained herein may include statements relating to stock-based compensation expense, tax rates, anticipated capital expenditures and product developments, and other strategic options. Forward-looking statements generally are accompanied by words such as “projects”, “intends”, “expects”, “anticipates”, “targets”, “estimates”, “will” and words of similar import that convey the uncertainty of future events or outcomes. All statements made in this communication that are not historical in nature should be considered forward-looking. By its nature, forward-looking information is not a guarantee of future performance or results and involves risks and uncertainties because it relates to events and depends on circumstances that will occur in the future.

Actual results could differ materially from these forward-looking statements. Many factors could change anticipated results, including: ongoing challenges and uncertainties posed by the lingering COVID pandemic for businesses and governments around the world; changes in relevant tax and other laws; foreign currency exchange risks; rising interest rates; risks associated with indebtedness, as well as our ability to reduce indebtedness and the timing thereof; the impact of semiconductor and other supply chain shortages; higher inflation, including wage competition and higher shipping costs; labor shortages and competition for skilled personnel; the inability to develop and market new competitive products; inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements and the providing of estimates of financial measures, in accordance with U.S. GAAP and related standards; disruptions in the global economy; the ongoing conflict between Russia and Ukraine, including the impact to energy prices and availability, especially in Europe; customer and supplier bankruptcies; changes in demand for products sold to the defense electronics, instrumentation, digital imaging, energy exploration and production, commercial aviation, semiconductor and communications markets; funding, continuation and award of government programs; cuts to defense spending resulting from existing and future deficit reduction measures or changes to U.S. and foreign government spending and budget priorities triggered by inflation, rising interest costs, and economic conditions; impacts from the United Kingdom’s exit from the European Union; uncertainties related to the policies of the U.S. Presidential Administration; the imposition and expansion of, and responses to, trade sanctions and tariffs; the continuing review and resolution of FLIR’s trade compliance and tax matters; escalating economic and diplomatic tension between China and the United States; threats to the security of our confidential and proprietary information, including cybersecurity threats; natural and man-made disasters, including those related to or intensified by climate change; and our ability to achieve emission reduction targets and decrease our carbon footprint. Lower oil and natural gas prices, as well as instability in the Middle East or other oil producing regions, and new regulations or restrictions relating to energy production, including those implemented in response to climate change, could further negatively affect our businesses that supply the oil and gas industry. Weakness in the commercial aerospace industry negatively affects the markets of our commercial aviation businesses. In addition, financial market fluctuations affect the value of the company’s pension assets. Changes in the policies of U.S. and foreign governments, including economic sanctions, could result, over time, in reductions or realignment in defense or other government spending and further changes in programs in which the company participates.

While the company’s growth strategy includes possible acquisitions, we cannot provide any assurance as to when, if or on what terms any acquisitions will be made. Acquisitions involve various inherent risks, such as, among others, our ability to integrate acquired businesses, retain key management and customers and achieve identified financial and operating synergies. There are additional risks associated with acquiring, owning and operating businesses internationally, including those arising from U.S. and foreign government policy changes or actions and exchange rate fluctuations.

Additional factors that could cause results to differ materially from those described above can be found in Teledyne’s Annual Report on Form 10-K for the year ended January 1, 2023 as well as subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are on file with the SEC and available in the “Investors” section of Teledyne’s website, teledyne.com, under the heading “Investor Information” and in other documents Teledyne files with the SEC.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Teledyne assumes no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

A live webcast of Teledyne’s second quarter earnings conference call will be held at 11:00 a.m. (Eastern) on Wednesday, July 26, 2023. To access the call, go to www.teledyne.com/investors/events-and-presentations approximately ten minutes before the scheduled start time. A replay will also be available for one month starting at 12:00 p.m. (Eastern) on Wednesday, July 26, 2023.

TELEDYNE TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE SECOND QUARTER AND SIX MONTHS ENDED

JULY 2, 2023 AND JULY 3, 2022

(Unaudited - in millions, except per share amounts)

 

 

 

Second
Quarter

 

Second
Quarter

 

Six
Months

 

Six
Months

 

 

2023

 

2022

 

2023

 

2022

Net sales

 

$

1,424.7

 

 

$

1,355.8

 

 

$

2,808.0

 

 

$

2,676.8

 

Costs and expenses:

 

 

 

 

 

 

 

 

Costs of sales

 

 

806.3

 

 

 

788.6

 

 

 

1,597.0

 

 

 

1,541.2

 

Selling, general and administrative

 

 

313.0

 

 

 

286.4

 

 

 

613.4

 

 

 

577.7

 

Acquired intangible asset amortization

 

 

49.3

 

 

 

51.3

 

 

 

99.0

 

 

 

104.9

 

Total costs and expenses

 

 

1,168.6

 

 

 

1,126.3

 

 

 

2,309.4

 

 

 

2,223.8

 

Operating income (loss)

 

 

256.1

 

 

 

229.5

 

 

 

498.6

 

 

 

453.0

 

Interest and debt income (expense), net

 

 

(22.3

)

 

 

(22.5

)

 

 

(43.3

)

 

 

(44.8

)

Gain (loss) on debt extinguishment

 

 

1.6

 

 

 

10.6

 

 

 

1.6

 

 

 

10.6

 

Non-service retirement benefit income (expense), net

 

 

2.9

 

 

 

2.9

 

 

 

6.2

 

 

 

5.7

 

Other income (expense), net

 

 

(3.4

)

 

 

1.0

 

 

 

(4.5

)

 

 

 

Income (loss) before income taxes

 

 

234.9

 

 

 

221.5

 

 

 

458.6

 

 

 

424.5

 

Provision (benefit) for income taxes (a)

 

 

49.4

 

 

 

50.2

 

 

 

94.3

 

 

 

40.6

 

Net income (loss) including noncontrolling interest

 

 

185.5

 

 

 

171.3

 

 

 

364.3

 

 

 

383.9

 

Less: Net income (loss) attributable to noncontrolling interest

 

 

0.2

 

 

 

 

 

 

0.3

 

 

 

 

Net income (loss) attributable to Teledyne

 

$

185.3

 

 

$

171.3

 

 

$

364.0

 

 

$

383.9

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Teledyne common shareholders

 

$

3.87

 

 

$

3.59

 

 

$

7.60

 

 

$

8.05

 

 

 

 

 

 

 

 

 

 

Weighted average diluted Teledyne common shares outstanding

 

 

47.9

 

 

 

47.7

 

 

 

47.9

 

 

 

47.7

 

(a)

The second quarter of 2023 includes net discrete income tax benefits of $1.4 million and the first six months of 2023 includes net discrete income tax benefits of $8.0 million, respectively. The second quarter of 2022 includes net discrete income tax benefits of $1.0 million and the first six months of 2022 includes net discrete income tax benefits of $57.5 million, respectively.

 

This financial statement was prepared in accordance with U.S. GAAP.

TELEDYNE TECHNOLOGIES INCORPORATED

SUMMARY OF SEGMENT NET SALES AND OPERATING INCOME

FOR THE SECOND QUARTER AND SIX MONTH S ENDED

JULY 2, 2023 AND JULY 3, 2022

(Unaudited - $ in millions)

 

 

 

Second
Quarter

 

Second
Quarter

 

%
Change

 

Six
Months

 

Six
Months

 

%
Change

 

 

2023

 

2022

 

 

2023

 

2022

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Digital Imaging

 

$

793.3

 

 

$

775.8

 

 

2.3

%

 

$

1,565.8

 

 

$

1,526.3

 

 

2.6

%

Instrumentation

 

 

328.4

 

 

 

312.5

 

 

5.1

%

 

 

661.9

 

 

 

621.4

 

 

6.5

%

Aerospace and Defense Electronics

 

 

186.0

 

 

 

168.8

 

 

10.2

%

 

 

359.2

 

 

 

335.0

 

 

7.2

%

Engineered Systems

 

 

117.0

 

 

 

98.7

 

 

18.5

%

 

 

221.1

 

 

 

194.1

 

 

13.9

%

Total net sales

 

$

1,424.7

 

 

$

1,355.8

 

 

5.1

%

 

$

2,808.0

 

 

$

2,676.8

 

 

4.9

%

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Digital Imaging

 

$

124.6

 

 

$

117.9

 

 

5.7

%

 

$

246.8

 

 

$

233.6

 

 

5.7

%

Instrumentation

 

 

81.4

 

 

 

73.6

 

 

10.6

%

 

 

162.1

 

 

 

145.2

 

 

11.6

%

Aerospace and Defense Electronics

 

 

53.2

 

 

 

44.1

 

 

20.6

%

 

 

100.2

 

 

 

87.0

 

 

15.2

%

Engineered Systems

 

 

11.5

 

 

 

8.6

 

 

33.7

%

 

 

21.5

 

 

 

18.0

 

 

19.4

%

Corporate expense

 

 

(14.6

)

 

 

(14.7

)

 

(0.7

)%

 

 

(32.0

)

 

 

(30.8

)

 

3.9

%

Operating income (loss)

 

 

256.1

 

 

 

229.5

 

 

11.6

%

 

 

498.6

 

 

 

453.0

 

 

10.1

%

Interest and debt income (expense), net

 

 

(22.3

)

 

 

(22.5

)

 

(0.9

)%

 

 

(43.3

)

 

 

(44.8

)

 

(3.3

)%

Gain (loss) on debt extinguishment

 

 

1.6

 

 

 

10.6

 

 

(84.9

)%

 

 

1.6

 

 

 

10.6

 

 

(84.9

)%

Non-service retirement benefit income (expense), net

 

 

2.9

 

 

 

2.9

 

 

%

 

 

6.2

 

 

 

5.7

 

 

8.8

%

Other income (expense), net

 

 

(3.4

)

 

 

1.0

 

 

*

 

 

(4.5

)

 

 

 

 

*

Income (loss) before income taxes

 

 

234.9

 

 

 

221.5

 

 

6.0

%

 

 

458.6

 

 

 

424.5

 

 

8.0

%

Provision (benefit) for income taxes (a)

 

 

49.4

 

 

 

50.2

 

 

(1.6

)%

 

 

94.3

 

 

 

40.6

 

 

132.3

%

Net income (loss) including noncontrolling interest

 

 

185.5

 

 

 

171.3

 

 

8.3

%

 

 

364.3

 

 

 

383.9

 

 

(5.1

)%

Less: Net income (loss) attributable to noncontrolling interest

 

 

0.2

 

 

 

 

 

*

 

 

0.3

 

 

 

 

 

*

Net income (loss) attributable to Teledyne

 

$

185.3

 

 

$

171.3

 

 

8.2

%

 

$

364.0

 

 

$

383.9

 

 

(5.2

)%

* not meaningful

(a)

The second quarter of 2023 includes net discrete income tax benefits of $1.4 million and the first six months of 2023 includes net discrete income tax benefits of $8.0 million, respectively. The second quarter of 2022 includes net discrete income tax benefits of $1.0 million and the first six months of 2022 includes net discrete income tax benefits of $57.5 million, respectively.

 

This financial statement was prepared in accordance with U.S. GAAP.

TELEDYNE TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited – in millions)

 

 

July 2, 2023

 

January 1, 2023

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

364.2

 

$

638.1

Accounts receivable and unbilled receivables, net

 

 

1,164.8

 

 

1,158.4

Inventories, net

 

 

970.6

 

 

890.7

Prepaid expenses and other current assets

 

 

141.1

 

 

130.7

Total current assets

 

 

2,640.7

 

 

2,817.9

Property, plant and equipment, net

 

 

766.0

 

 

769.8

Goodwill and acquired intangible assets, net

 

 

10,293.5

 

 

10,313.6

Prepaid pension assets

 

 

186.1

 

 

178.4

Other assets, net

 

 

270.0

 

 

274.3

Total assets

 

$

14,156.3

 

$

14,354.0

LIABILITIES AND EQUITY

 

 

 

 

Accounts payable

 

$

459.4

 

$

505.7

Accrued liabilities

 

 

724.0

 

 

717.6

Current portion of long-term debt

 

 

450.1

 

 

300.1

Total current liabilities

 

 

1,633.5

 

 

1,523.4

Long-term debt, net of current portion

 

 

2,903.2

 

 

3,620.5

Other long-term liabilities

 

 

1,036.7

 

 

1,037.2

Total liabilities

 

 

5,573.4

 

 

6,181.1

Redeemable noncontrolling interest

 

 

3.9

 

 

3.7

Total stockholders' equity

 

 

8,579.0

 

 

8,169.2

Total liabilities and equity

 

$

14,156.3

 

$

14,354.0

 

This financial statement was prepared in accordance with U.S. GAAP.

TELEDYNE TECHNOLOGIES INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

FOR THE SECOND QUARTER AND SIX MONTHS ENDED JULY 2, 2023 AND JULY 3, 2022

(Unaudited - in millions, except per share amounts)

 

 

Second Quarter 2023

 

Second Quarter 2022

 

 

Income
(loss)
before
income
taxes

 

Net (loss)
income
attributable
to Teledyne

 

Diluted
earnings
per
common
share

 

Income
(loss) before
income
taxes

 

Net (loss)
income
attributable
to Teledyne

 

Diluted
earnings
per
common
share

GAAP

 

$

234.9

 

$

185.3

 

$

3.87

 

$

221.5

 

$

171.3

 

$

3.59

Adjusted for specified items:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

49.3

 

 

38.0

 

 

0.79

 

 

51.3

 

 

39.4

 

 

0.83

Acquisition-related tax matters

 

 

 

 

0.4

 

 

0.01

 

 

 

 

0.6

 

 

0.01

Non-GAAP

 

$

284.2

 

$

223.7

 

$

4.67

 

$

272.8

 

$

211.3

 

$

4.43

 

 

Six Months 2023

 

Six Months 2022

 

 

Income
(loss)
before
income
taxes

 

Net (loss)
income
attributable
to Teledyne

 

Diluted
earnings
per
common
share

 

Income
(loss)
before
income
taxes

 

Net (loss)
income
attributable
to Teledyne

 

Diluted
earnings
per
common
share

GAAP

 

$

458.6

 

$

364.0

 

$

7.60

 

$

424.5

 

$

383.9

 

 

$

8.05

 

Adjusted for specified items:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

99.0

 

 

76.2

 

 

1.58

 

 

104.9

 

 

80.7

 

 

 

1.69

 

Acquisition-related tax matters

 

 

 

 

0.7

 

 

0.02

 

 

 

 

(49.4

)

 

 

(1.04

)

Non-GAAP

 

$

557.6

 

$

440.9

 

$

9.20

 

$

529.4

 

$

415.2

 

 

$

8.70

 

 

 

Second Quarter 2023

 

Second Quarter 2022

 

 

Operating
income (loss)

 

Operating
margin

 

Operating
income (loss)

 

Operating
margin

GAAP

 

$

256.1

 

18.0 %

 

$

229.5

 

16.9 %

Adjusted for specified items:

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

49.3

 

 

 

 

51.3

 

 

Non-GAAP

 

$

305.4

 

21.4 %

 

$

280.8

 

20.7 %

 

 

Six Months 2023

 

Six Months 2022

 

 

Operating
income (loss)

 

Operating
margin

 

Operating
income (loss)

 

Operating
margin

GAAP

 

$

498.6

 

17.8 %

 

$

453.0

 

16.9 %

Adjusted for specified items:

 

 

 

 

 

 

 

 

Acquired intangible asset amortization

 

 

99.0

 

 

 

 

104.9

 

 

Non-GAAP

 

$

597.6

 

21.3 %

 

$

557.9

 

20.8 %

TELEDYNE TECHNOLOGIES INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited - in millions)

 

 

Second Quarter 2023

 

 

GAAP
Operating
Income (loss)

 

Acquired
intangible
asset
amortization

 

Non-GAAP
Operating
Income (loss)

 

 

 

 

 

 

 

Digital Imaging

 

$

124.6

 

 

$

45.6

 

$

170.2

 

Instrumentation

 

 

81.4

 

 

 

3.5

 

 

84.9

 

Aerospace and Defense Electronics

 

 

53.2

 

 

 

0.2

 

 

53.4

 

Engineered Systems

 

 

11.5

 

 

 

 

 

11.5

 

Corporate expense

 

 

(14.6

)

 

 

 

 

(14.6

)

Total

 

$

256.1

 

 

$

49.3

 

$

305.4

 

 

 

Second Quarter 2022

 

 

GAAP
Operating
Income (loss)

 

Acquired
intangible
asset
amortization

 

Non-GAAP
Operating
Income (loss)

 

 

 

 

 

 

 

Digital Imaging

 

$

117.9

 

 

$

46.4

 

$

164.3

 

Instrumentation

 

 

73.6

 

 

 

4.7

 

 

78.3

 

Aerospace and Defense Electronics

 

 

44.1

 

 

 

0.2

 

 

44.3

 

Engineered Systems

 

 

8.6

 

 

 

 

 

8.6

 

Corporate expense

 

 

(14.7

)

 

 

 

 

(14.7

)

Total

 

$

229.5

 

 

$

51.3

 

$

280.8

 

 

 

Six Months 2023

 

 

GAAP
Operating
Income (loss)

 

Acquired
intangible
asset
amortization

 

Non-GAAP
Operating
Income (loss)

 

 

 

 

 

 

 

Digital Imaging

 

$

246.8

 

 

$

91.4

 

$

338.2

 

Instrumentation

 

 

162.1

 

 

 

7.2

 

 

169.3

 

Aerospace and Defense Electronics

 

 

100.2

 

 

 

0.4

 

 

100.6

 

Engineered Systems

 

 

21.5

 

 

 

 

 

21.5

 

Corporate expense

 

 

(32.0

)

 

 

 

 

(32.0

)

Total

 

$

498.6

 

 

$

99.0

 

$

597.6

 

 

 

Six Months 2022

 

 

GAAP
Operating
Income (loss)

 

Acquired
intangible
asset
amortization

 

Non-GAAP
Operating
Income (loss)

 

 

 

 

 

 

 

Digital Imaging

 

$

233.6

 

 

$

94.9

 

$

328.5

 

Instrumentation

 

 

145.2

 

 

 

9.6

 

 

154.8

 

Aerospace and Defense Electronics

 

 

87.0

 

 

 

0.4

 

 

87.4

 

Engineered Systems

 

 

18.0

 

 

 

 

 

18.0

 

Corporate expense

 

 

(30.8

)

 

 

 

 

(30.8

)

Total

 

$

453.0

 

 

$

104.9

 

$

557.9

 

TELEDYNE TECHNOLOGIES INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited - in millions)

 

 

 

July 2, 2023

 

January 1, 2023

Current portion of long-term debt - GAAP

 

$

450.1

 

 

$

300.1

 

Long-term debt - GAAP

 

 

2,903.2

 

 

 

3,620.5

 

Total debt - non-GAAP

 

 

3,353.3

 

 

 

3,920.6

 

Less cash and cash equivalents - GAAP

 

 

(364.2

)

 

 

(638.1

)

Net debt - non-GAAP

 

$

2,989.1

 

 

$

3,282.5

 

 

 

Third Quarter 2023

 

Twelve Months 2023

 

 

Low

 

High

 

Low

 

High

GAAP Diluted Earnings Per Common Share Outlook

 

$

3.76

 

$

3.90

 

$

15.60

 

$

15.88

Adjusted for specified item:

 

 

 

 

 

 

 

 

FLIR transaction and integration costs

 

 

0.14

 

 

0.12

 

 

0.19

 

 

0.16

Acquired intangible asset amortization

 

 

0.80

 

 

0.78

 

 

3.19

 

 

3.14

Acquisition-related tax matters

 

 

 

 

 

 

0.02

 

 

0.02

Non-GAAP Diluted Earnings Per Common Share Outlook

 

$

4.70

 

$

4.80

 

$

19.00

 

$

19.20





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